For the past two weeks, sentiment within the US domestic scrap market has been mostly stagnant, as sources polled on September 15 and 23 believed that busheling scrap prices were likely to trend down, whereas prices for HMS, shredded, and P&S scrap would likely hold sideways.
The anticipated downtrend for busheling scrap, some noted, had been linked to softer pig iron prices. “Pig iron is relatively cheap right now compared to [busheling scrap],” a source said earlier this month, noting that he believed that if mills can buy more pig iron at less money, that would likely impact busheling prices.
Pig iron prices have since started to climb, and sources say this trend, along with widespread rumors that Cleveland Cliffs is about to start buying significant amounts of prime grade scrap, has many believing that the busheling market will now hold at sideways.
“The mills can’t buy cheap pig iron anymore, for one,” a source said. “I can also tell you that a lot of us are hearing that Cleveland Cliffs (aka, AK Steel / ArcelorMittal) is going to start buying prime, and they haven’t bought prime in the past 10 years at least. If they start buying a ton of prime, which some think could equate to as much as 10-20% of their overall melt program, this could push prime up moving forward.”
Several other sources said they have heard similar rumors, and some speculate that the buys could start in October. Pricing sentiment for HMS, P&S, and shredded scrap has also improved.
“We were told that David Joseph was putting out their feelers in the Southeast earlier this week looking for shredded scrap tons,” another source added, noting a belief that this was largely linked to transportation and delivery issues pertaining to previous orders that have not yet been delivered. “I’ve heard this from several people, and we all thought it was interesting because they could have waited until the buy cycle started, but they didn’t.”
Sources in the Midwest also talked of still-lingering transportation issues, adding that in some regions, HMS and P&S scrap tons are light, which has mills relying more on shred.
“A lot has changed in the past week and at this point, I’m calling the market at up $20-$25 on cuts and shred, and sideways on busheling,” a final source added.
The October buy cycle is expected to start early next week.